Capital Briefing for Week 2 of the 2017 Session

The House and Senate settled into their session routines this week with the Business Council of Alabama monitoring and acting on the business community’s legislative agenda that includes infrastructure, education, health care, legal reform, tax and fiscal policy, and other areas of interest.

As of the second week in session, the Alabama House and Senate have filed 485 bills and 95 resolutions collectively. A total of 42 bills have passed their house of origin.

With a long day on Tuesday, the House spent the majority of its time on a resolution supporting President’s Trump’s government reform agenda and a bill by Rep. Phil Williams, R-Huntsville, that would withhold funding from public universities that declare themselves “sanctuary campuses.” The Senate worked through seemingly non-controversial special order calendars on Tuesday and Thursday.

Senate President Del Marsh, R-Anniston, spoke at the Business Council of Alabama’s second Tuesday briefing of the 2017 regular legislative session. In addition to infrastructure needs, Sen. Marsh discussed a proposed state prison bond issue of $800 million, historic building tax credits, digital goods taxation, budgeting, and a future education master plan.

“Our roads are the arteries of commerce, and if Alabama expects to remain competitive with our neighboring states, we must invest responsibly in our state and local infrastructure,” BCA President and CEO William J. Canary said.

BCA members are urged to contact their legislators and express concern with SB 67, the Mandatory Unitary Combined Reporting legislation that has been assigned to committee. See the Tax and Fiscal Policy section of the Capital Briefing for more information.

The House and Senate return to session Tuesday for the fifth legislative day.

EDUCATION

Longitudinal Data System Bills Pass House/Senate Committees

House and Senate committees favorably reported bills to allow the Alabama Department of Labor to aggregate existing deidentified data from several measurements about school performance to tailor future curriculum needs in order to better prepare students for careers and further education and skills training. (Deidentified data prevents personal identification.)

The House Education Policy Committee on Wednesday voting 5-4 favorably approved HB 97 by Rep. Terri Collins, R-Decatur. The bill had one amendment.

On a voice vote Tuesday, the Senate Governmental Affairs Committee approved SB 153 by Sen. Bobby Singleton, D-Greensboro. Committee Chairman Sen. Jimmy Holley, R-Elba, said the bill will be worked on before it hits the Senate.

Both bills would authorize the Labor Department to aggregate education data for workforce training and curriculum guidance. “We’ll be able to supply data to the Department of Labor,” Sen. Singleton said.

Officials said that deidentified education data are not currently centralized for analysis. “This information will help us steer curriculum in the right direction,” Labor Secretary Fitzgerald Washington said.

As a recommendation of the Alabama Workforce Council, the BCA supports the creation of an Alabama Longitudinal Data System, which the bills would create.

School Scholarship Tax Credit Law Fine-Tuned

A Senate committee on Wednesday approved a bill that would add tax-credit options for donors of public school scholarships under the Alabama Accountability Act of 2013.

The bill if it becomes law will allow scholarship-donating companies to take a credit on their utilities gross receipts tax in addition to the income tax credit already allowed. The bill would not increase the $30 million annual cap on tax credits but would allow taxpayers to take a credit of up to 75 percent of their income tax liability for a scholarship donation. The current credit maximum is 50 percent.

Sen. Marsh said he wants to ensure that students who receive scholarships don’t lose them if donations decrease. Scholarship granting organizations must use at least 95 percent of the tax-credit funded donations for scholarships, which cover tuition and mandatory fees at private or public schools for students whose parents move them to better schools. Students in underperforming schools get first priority.

HEALTH CARE

Medicaid Possibilities Are Revealed in Light of Washington, D.C. Proposals

The Alabama Hospital Association briefed legislators Thursday on proposed new Medicaid options and their implications. Deborah Bachrach at Manatt Consultants, a federal consultant to the AHA, was the presenter. Formerly she was the Medicaid director and deputy commissioner of health for the New York State Department of Health’s Office of Health Insurance Programs.

A new federal proposal would cut federal Medicaid funds by $1 trillion – 25 percent – over 10 years, resulting in a combined 33 percent reduction in federal funds for Medicaid and CHIP, her report said. Currently federal dollars are guaranteed as match to state spending so long as states comply with federal Medicaid law, rules, and the terms and conditions of any state waivers.

TAX AND FISCAL POLICY

Combined Reporting Bill Assigned to Economic Development Committee

The tax increase bill known as Mandatory Unitary Combined Reporting (MUCR) SB 67, sponsored by Sen. Linda Coleman-Madison, D-Birmingham, has been assigned to the Senate Committee on Fiscal Responsibility and Economic Development.

In reality, MUCR is nothing more than a tax increase. Upon its filing, BCA President and CEO Billy Canary issued a statement explaining how combined reporting hinders economic development and job retention, creates confusion in the tax code, and is costly for business and the state itself.

“The Business Council of Alabama and Alabama’s economic development community have consistently and actively opposed Mandatory Unitary Combined Reporting as an arbitrary tax increase on business that will negatively impact Alabama business’s ability to provide quality, high-paying jobs for our citizens,” Canary said. “It is simply a power grab that would greatly expand the bureaucracy and authority of the Alabama Department of Revenue.”

The fiction being portrayed is that it targets only out-of-state corporations. “The truth is, combined reporting unfairly targets companies in Alabama that provide thousands of quality jobs,” Canary said.

Faster Local Tax Distributions From the Simplified Sellers Use Tax

The Senate voting 28-0 on Thursday passed SB 86 by Sen. Trip Pittman, R-Daphne. It received a 14-0 favorable report last week by the Senate Finance and Taxation General Fund Committee.

The bill would require the Alabama Department of Revenue to distribute collections from the simplified sellers use tax to counties and municipalities monthly rather than quarterly. The bill would remove the six-month deferral restriction for eligible sellers and would simplify invoice language for tax transactions.

“We’ll now be able to get the money to local governments faster,” Sen. Pittman said. The legislation also would reduce reporting delays, he said.

OTHER BILLS OF INTEREST

Judicial and Legal Reform

HB 92 by Rep. Paul Beckman, R-Prattville, would increase the jurisdiction of district courts to cover all cases where the amount in controversy is $15,000 or less, an increase from the current $10,000 limit. This bill passed out of committee on Wednesday.

SB 90 by Sen. Arthur Orr, R-Decatur, would create a Judicial Resources Allocation Commission authorized to increase or decrease the number of circuit and district court judgeships based on rankings determined by population, caseload, judicial duties in the circuit or district, and other criteria. This bill was passed by the Senate this week.

SB 200 by Sen. Quinton Ross, D-Montgomery, would “ban the box” on job applications for positions with state or local governments, delaying questions about an applicant’s criminal background until after a conditional job offer has been made.

SB 119 by Sen. Tom Whatley, R-Auburn would provide for the expungement of criminal records for youthful offenders.

Infrastructure

HB 221 by Rep. Matt Fridy, R-Montevallo (and SB 205 by Sen. Cam Ward, R-Alabaster), would create the State Transportation Commission, who would be appointed by the governor and have the authority to select the Director of the Department of Transportation.

Labor and Employment

HB 242 by Rep. Danny Garrett R-Trussville, would add individual LLC members to the existing workers’ compensation exemption available to corporate officers and remove the yearly filing requirement to make use of this exception.

SB 188 by Sen. Arthur Orr, R-Decatur, relating to unemployment benefits, would reform the length of time benefits are available to be on a sliding scale tied to the state’s average unemployment rate.

SB 196 by Sen. Orr would expand the type of activity related to workers’ compensation fraud that is subject to criminal penalties, authorize an award of civil damages for persons injured by an individual’s fraudulent claim, allow the immediate termination of compensation payments upon a determination of fraud, and provide for the repayment of fraudulently obtained benefits with interest to employers and carriers.

Tax and Fiscal Policy

HB 263 by Rep. Ken Johnson, R-Moulton, relating to the existing apportionment rules of the financial institution excise tax, would codify the practice of including loans and credit card receivables as part of the “property” factor of the formula.

HB 264 by Rep. David Faulkner, R-Birmingham, would further define qualified trusts to include trusts formed as part of certain qualified pension plans, qualified stock bonus plans, and profit sharing plans.

HB 266 by Rep. Faulkner would specify that the Alabama Tax Tribunal would not be subject to the declaratory judgment, declaratory ruling, or contested case provisions of the Alabama Administrative Procedure Act.

SB 192 by Sen. Tom Whatley, R-Auburn, is a local constitutional amendment relating to the expansion of municipal providers of telecommunications services in Lee County.

OTHER NEWS

Governor Announces Special Election Dates for U.S. Senate Seat

Governor Bentley scheduled Tuesday, Nov. 6, 2018, as the date for election to the U.S. Senate seat formerly held by U.S. Attorney General Jeff Sessions. The primaries will take place on Tuesday, June 5, 2018, and any runoff would be July 17, 2018. Nov. 6, 2018, is the state general election date. Governor Bentley’s proclamation says the last day for candidates to qualify with their respective parties is Friday, Feb. 9, 2018, at 5:00 p.m.

After Sessions resigned to become U.S. Attorney General, Bentley named Alabama Attorney General Luther Strange, R-Ala., to the seat.